Bài giảng International Business - Chapter ten: Legal Forces

Legal ForcesMcGraw-Hill/IrwinInternational Business, 11/eCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.chapter tenLearning ObjectivesDiscuss the complexity of the legal forces that confront international businessRecognize the importance of foreign lawExplain contract devices and institutions that assist in interpreting international contractsRecognize the need and methods to protect your intellectual properties3Learning ObjectivesDiscuss enforcement of antitrust lawsExplain the risk of product liability legal actions, which can result in imprisonment for employees or fines for them and the companyDiscuss U.S. laws that affect international business operations4International Legal ForcesRule of law allows foreign businesses to know interests will be protectedPublic International LawLegal relations between governmentsPrivate International LawLaws governing transactions of individuals and companies that cross international borders5Sources of International LawThe most important source is found in bilateral and multilateral treaties between nationsTreaties are agreements between countries, which may be bilateral (between two countries) or multilateral (involving more than two countries); also called conventions, covenants, compacts, or protocols United Nation’s International Court of Justice creates law when it decides disputes6ExtraterritorialityA country’s attempt to apply its laws to foreigners or nonresidents and to acts and activities that take place outside its borders Not done through force, but by traditional legal means7International Dispute SettlementLitigation in the United Stateswell-developed court systems that facilitate litigationOne reason many people outside the U.S. dislike litigation in the U.S. is the process of discoveryUnlike most other countries, the U.S. has two major court systemsThe federal court system and the state court systems8Performance of ContractsUnited Nations SolutionMany countries, including the U.S., have ratified the UN Convention on Contracts for International Sales of Goods (CISG)CISG established uniform legal rules to govern international sales contracts and the rights and obligations of the buyer and sellerCISG is automatically applied to all contracts9Performance of ContractsPrivate Solution: ArbitrationInstead of going to court in any country, companies may opt for arbitrationA process, agreed to by parties to a dispute in lieu of going to court, by which a neutral person or body makes a binding decisionGenerally fasterMore informalConfidentialLess expensive10Enforcement of Foreign Arbitration AwardsThe UN Convention on the Recognition and Enforcement of Foreign Arbitral AwardsThe U.S. and most UN member-countries of have ratified this conventionBinds ratifying countries to compel arbitration when the parties have so agreed in their contract and to enforce the resulting awards11Intellectual Property: Patents, Trademarks, Trade Names, Copyrights, and Trade SecretsIntellectual property includesPatentsTrademarksTrade namesCopyrightsTrade secretsAll result from the exercise of someone’s intellect12Intellectual PropertyPatents (Protection)International Convention for the Protection of Industrial PropertyEuropean Patent Organization (EPO)The World Intellectual Property Organization (WIPO)13Intellectual PropertyTrademarksProtection varies by country, 10 to 20 yearsMadrid Agreement of 1891 General American Convention for Trademark and Commercial ProtectionBilateral basis in friendship, commerce, and navigation treaties14Intellectual PropertyTrade NamesProtected in countries that adhere to the Convention for the Protection of Industrial PropertyCopyrightsProtection provided under the Berne Convention of 1886 adhered to by 77 countriesUniversal Copyright Convention of 1954 adopted by 92 countries15Common Law or Civil Law?Common LawJurisdiction has more power to expand rules to fit particular casesCivil LawJurisdiction is bound by the words in the codeMuch more predictable16Legal System Differences between Europe and United StatesEurope Legislation is rarely amended and regulations are rarely revisedCourts are not as often asked to give their interpretationsIf they are, the decisions are rarely appealedUnited StatesLaws and regulations are constantly being amended or revised by legislatures and the agencies17Legal System Differences between England and the U.S. England has a split legal profession with barristers and solicitorsEngland has no jury for civil court actionsContingency fees less common in EnglandAward of costs to the winner in civil litigation standard in EnglandPretrial discovery differs18Standardizing LawsMany attempts have been made to standardize laws among various countriesInternational business flows much better with a uniform set of rulesAttempts includeTax conventions and treatiesAntitrust cooperationInternational Center for Settlement of Investment DisputesUN Convention on International Sale of GoodsInternational Organization for Standardization (ISO)International Electrotechnical Commission (IEC)19TaxationNonrevenue tax purposes To redistribute income, discourage consumption of products such as tobacco and alcohol, and encourage purchase of domestic rather than imported products20National Tax Approach DifferencesTax LevelsRange from relatively high in some Western European countries to zero in tax havensSome countries have capital gains taxes, and some do notCapital gain is realized when an asset is sold for an amount greater than its cost21National Differences of ApproachTax TypesCapital gains taxIncome taxCommon in industrialized countriesValue-added taxTax based on the value of goods and servicesUsed in EuropeUnitary tax22Taxation23Tax Laws and RegulationsComplexity of national tax systems differsMany consider tax laws and regulations of the U.S. the most complexCompliance with tax laws and their enforcement vary widelyGermany and U.S. strict, Italy and Spain relatively laxOther differences includeTax incentives, exemptions, costs, depreciation allowances, foreign tax credits, timing, and double corporate taxation24TaxationTax Treaties or ConventionsTreaties between countries that bind the governments to share information about taxpayers and cooperate in tax law enforcement, often called tax conventionsThe U.S. has tax treaties with over 50 countries25TaxationNational Tax Jurisdiction A tax system for expatriate citizens of a country whereby the country taxes them on the basis of nationality even though they live and work abroadTerritorial Tax JurisdictionExpatriates are exempt from their country’s taxes26Antitrust LawsAntitrust laws Laws to prevent price fixing, market sharing, and business monopoliesCompetition policyThe European Union equivalent of antitrust lawsThe U.S. and the EU have attempted to enforce their antitrust laws extraterritoriallyJapan’s Fair Trade Commission the “toothless tiger” Japanese companies are incorporating antitrust thinking into strategy27Tariffs, Quotas, and Other Trade ObstaclesPurposes of tariffsTo raise revenue for governmentTo protect domestic producersQuotas limit the number or amount of importsFor protectionOther trade obstacles includeHealth requirementsPackaging requirementsLanguage requirementsWeak patent or trademark protectionQuarantine periodsVoluntary Restraint Agreements28TortsProduct LiabilityStandard that holds a company and its officers and directors liable and possibly subject to fines or imprisonment when their product causes death, injury, or damageStrict LiabilityStandard that holds the designer or manufacturer liable for damages caused by a product without the need for a plaintiff to prove negligence in the product’s design or manufacture29U.S. Laws That Affect U.S. Firms’ International BusinessFederal Employment LawsTitle VII of the CRA of 1964ADEA and ADAForeign Corrupt Practices Act (FCPA)U.S. law prohibits making payments to foreign government officials for special treatmentCongress passed FCPA outlawing bribery, but not “grease” payments302002 Bribe Payers Index 31Accounting LawSarbanes-Oxley Act (SOX)Brings major changes to the regulation of corporate governance and financial practiceNew reporting requirementsOfficer and director responsibilitiesAuditor independenceApplies to any company, domestic or foreign, that has securities registered or is required to file reports under the Securities Exchange Act of 193432